A holding company is a commercial company whose objective is to own or manage all or most of the shares of other companies, in order to obtain total or partial control over those companies. It is a type of business integration where a company seeks profitability, but not necessarily the integration of activities.
A holding company is a business figure that is usually created to benefit from some tax incentives, as is the case of the holding companies in Andorra. These have a particular taxation because they are subject to taxes different from those imposed on normal companies.
There are different types of holding companies: financial, family, state, common capital, among others.
The holding companies in Andorra can also have 2 main legal entities: the public limited company (PLC or SA in Spanish) and the limited liability company (Ltd or SL in Spanish). The first requires a minimum capital stock of € 60,000, divided into numbered shares and registered in the company’s registry. While to establish the second requires a contribution of social capital of at least € 3,000, divided into non-negotiable shares, and having at least 10 shareholders.
Among the advantages that a holding company can have, besides the low taxes in Andorran holdings, we can find:
With this business figure there are also disadvantages, such as internal communication problems, caused by the flow of information. As well as loss of identity and corporate image. That is why we recommend our advice when creating a society in Andorra.
These companies have the advantage that they are fiscally beneficial, both for the company itself and for its shareholders. Dividends resulting from foreign companies that are related to a holding, for an Andorran who participates in it, are not taxed by Personal Income Tax (IRPF in Spanish). The profits that the holding companies in Andorra may receive from their association with any foreign company are also exempt from tax.
This type of company is a trend nowadays, as they increase and promote entrepreneurship in the country. Andorra has also the tendency in the recent years of the establishment of companies of this and other types. This is thanks to the financial, economic and fiscal advantages offered by the Principality, which are optimal for entrepreneurs looking for new opportunities to develop their company.
And on the other hand, social advantages that make Andorra one of the countries with the best quality of life in Europe.
The cultural diversity found in the country, the citizen and social safety, and also the education, health and infrastructure systems, make Andorra a very likely place to establish a company and even a long-term residence.
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